CanadianPayroll/docs/source/introduction.rst

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INTRODUCTION TO CANADIAN PAYROLL
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Payroll is a necessary function in every organization that has employees, 
as each employee expects to be paid for the work they perform. While the 
amount of maximum remuneration that an employee receives for their work is 
not legislated by any government (unless the employee is a federal or 
provincial/territorial civil servant), there is legislation in place at
both the federal and provincial/territorial levels that governs many 
aspects of processing employees' pay, their taxable benefits and observing 
their rights as employees.

t is important to note that this course deals with payroll, the function of paying employees
for work performed for employers. Self-employed workers or contractors, who submit
invoices for the work they perform and receive payment through accounts payable and not
payroll, are not employees.

Both the federal and the Québec governments provide factors that can be used to determine
whether an employee-employer relationship exists. It is crucial to know how to determine the
type of relationship that exists between the worker and the organization and to ensure that
any payments made comply with legislation.

Payroll Objectives and Definitions
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The **primary objective of the payroll function** in every organization is to 
pay employees accurately and on time, in compliance with legislative 
requirements, for a full annual payroll cycle.

Every employee expects to receive their pay on the day it is due in the 
manner arranged with their employer, either by cheque or direct deposit. 
In addition to ensuring that employees have been paid, payroll 
practitioners must also be able to communicate payroll information to
all stakeholders.

- **Payroll** is the process of paying employees in exchange for the services they perform.

- **Legislation** refers to laws enacted by a legislative body. In Canada 
there are many legislative sources that payroll practitioners must comply 
with at two separate levels: the federal and the provincial/territorial 
governments. Later in the chapter we will explore the compliance
requirements for the various pieces of legislation from these sources.

- **Compliance** is the observance of official requirements. For payroll 
practitioners, this means performing payroll functions according to 
federal and provincial/territorial legislative and non-governmental 
stakeholder requirements.

The legislative requirements are termed **statutory**. This means they are 
enacted, created, or regulated by statute, a law enacted by the legislative 
branch of a government. Fines and penalties can be imposed if an organization 
is not in compliance with the legislative requirements in each jurisdiction.

When dealing with federal and provincial/territorial government agencies, 
payroll administrator must know the many pieces of legislation that 
regulate their work and the compliance requirements associated with each. 
Payroll administrators are responsible for ensuring their organization is 
compliant with all payroll related legislation, thus eliminating the 
potential for any fines or penalties.

In payroll, there are also compliance requirements from other non-government stakeholders,
for example, union collective agreements or group insurance policies. Payroll administrator
must therefore ensure the organization is compliant with all stakeholder requirements.

The responsibilities of the payroll administrator will differ depending on 
the size of the organization, the number of jurisdictions in which they pay, 
the reporting structure under which they work, and whether there are other 
related departments, such as human resources, finance and administration in 
the organization.

Small and medium-sized organizations may have payroll administrators whose 
positions include other functions that, in a larger organization, would 
fall under other departments. This payroll practitioner may be required to 
handle multiple tasks, such as employee recruitment, human resource policy 
development, benefits administration, accounts payable, accounts receivable, 
budgets and/or administration. 

Larger organizations may have a distinct payroll department with specific 
payroll positions, in addition to separate human resources, accounting and 
administration groups. Even in a multi-departmental organization, payroll 
administrators must have knowledge of the various stages of the life cycle 
of an employee. From hiring through termination of employment, many of 
these stages will impact how to produce the employee's pay and prepare 
required reports.

The payroll department in a large organization may have:

  - payroll administrators who are responsible for entering payroll data into the system and making required payroll remittances

  - payroll coordinators who are responsible for preparing the payroll journal entries and reconciling the payroll related accounts

  - payroll managers who manage the payroll function, the payroll staff and represent payroll at the management level

Payroll Content Knowledge
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Payroll administrators should know the following to effectively perform 
their duties:
  - **Payroll Compliance Legislation:** the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act, Employment/Labour Standards, privacy legislation, Workers' Compensation and provincial/territorial payroll-specific legislation

  - **Payroll Processes:** the remuneration and deduction components of payroll and how to use these components to calculate a net pay in both regular and non-regular circumstances

  - **Payroll Reporting:** how to calculate and remit amounts due to government agencies, insurance companies, unions and other third parties. 
  
In addition, payroll reporting includes accounting for payroll expenses and accruals to internal financial systems and federal and provincial/territorial year-end reporting.

Technical Skills
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The technical skills required by payroll professionals include proficiency in 
computer programs such as payroll software and financial systems, 
spreadsheets, databases and word processing.

Organizations often change their payroll and business systems to meet new 
technology requirements and corporate reporting needs. It is important for 
payroll personnel to have the ability to be adaptable to changing systems. 
As a payroll practitioner, you must be prepared and willing to embrace 
continuous learning.

Personal and Professional Skills
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The following personal and professional skills will assist payroll 
administrators in dealing with the various stakeholders involved in the 
payroll process:

  - written communication skills, such as preparing employee emails and memos, management reports, policies and procedures and correspondence with various levels of government

  - verbal communication skills, to be able to respond to internal and external stakeholder inquiries

  - the ability to read, understand and interpret legal terminology found in documents such as collective agreements, benefit contracts and government regulations

  - excellent mathematical skills to perform various calculations

  - problem solving, decision-making, time management and organizational skills

Behavioural and Ethical Standards
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Behaviour and ethics are two areas that build on the skills that an effective payroll practitioner
must have. Effective payroll professionals should be:

  - trustworthy, as the potential for fraud is ever present

  - conscientious, with a keen attention to detail

  - discreet, due to the confidential nature of information being handled

  - tactful in dealing with employees who can be very sensitive when 
  discussing their financial issues

  - perceptive, able to understand all sides of an issue

  - able to work under the pressures of absolute deadlines

  - able to use common sense in order to recognize problems quickly and 
  apply sound solutions

  - able to remain objective and maintain a factual perspective when 
  dealing with questions and inquiries

Payroll Stakeholders
=====================

**Stakeholders** are the individuals, groups and agencies, both internal 
and external to the organization, who share an interest in the function and 
output of the payroll department. Stakeholders can be considered customers of the payroll department and payroll practitioners
can take a proactive customer service approach to serving these individuals and groups.

Payroll Management Stakeholders
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**Payroll Management Stakeholders** are the federal and provincial/territorial governments, 
the internal stakeholders and the external stakeholders. Internal stakeholders 
include employees, employers and other departments within the organization. 
External stakeholders include benefit carriers, courts, unions, pension 
providers, charities, third party administrators and outsource/software vendors.

Content Review
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  - The primary objective of the payroll function in every organization is to pay employees accurately and on time, in compliance with legislative requirements, for a full annual payroll cycle.

  - Payroll is the process of paying employees in exchange for the services they perform.

  - Legislation refers to laws enacted by a legislative body.

  - Compliance is the observance of official requirements.

  - Payroll practitioner knowledge consists of information on payroll compliance legislation, payroll processes and payroll reporting as well as technical, personal and professional skills.

Review Questions
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1. What is the primary objective of the payroll department?